By Atom Markarian
The World Bank has released $35 million in additional low-interest loans to Armenia that are designed to improve its public services and to shore up its struggling agriculture, the bank’s resident representative in Yerevan announced on Wednesday.
The official, Roger Robinson, said the decision was made by the World Bank’s governing board in Washington Tuesday. It came the day after the Armenian government’s economic policies were rewarded with a fresh $15 million credit from the International Monetary Fund.
The biggest of the World Bank loans, worth $23 million, is aimed at improving supplies of drinking water and wastewater disposal in the regions outside Yerevan. “It will improve the reliability and quality or drinking water, increase hours of service, and provide for greater operating efficiency,” Brian Steven Smith, head of the bank’s team designing the project, said in a statement from Washington.
Smith said the project will build on “improvements” which have been achieved with a similar $30 million project implemented by the World Bank in Yerevan since 1999. The money has been used for a modernization and restructuring of the city’s hugely inefficient water network which has been managed by an Italian firm in the last three years. The Armenian government says the average Yerevan household, which currently has running water only several hours a day, will enjoy round-the-clock supplies by the end of the year.
However, the use of the funds has been investigated and seriously questioned by an ad hoc commission of the Armenian parliament. The commission led by deputy speaker Vahan Hovannisian concluded in a preliminary report in March that the Municipal Development Project (MDP) has failed to achieve its main objectives, alleging widespread fraud and mismanagement.
The parliamentary inquiry also charged that the government’s Committee on Water Resources and the Italian operator have grossly inflated the price of water meters sold to hundreds of thousands of households. It also criticized the fact that 27 percent of the World Bank loan has been spent on project management, overheads and logistics.
The commission report was brushed aside as untrue by Prime Minister Andranik Markarian and other senior Armenian officials -- a stance firmly endorsed by Robinson. “What I have seen and heard of in their interim report is wrong and the government has prepared quite a comprehensive reply to some of the parts of the interim report,” Robison told reporters.
The second World Bank loan, worth $10.15 million, is meant to “improve the transparency, accountability, effectiveness and efficiency in public sector management,” the World Bank statement said. A government body overseeing Armenia’s civil servants will be a key beneficiary of the funds. They will also be used for training the staff of the parliament’s Audit Chamber and supplying it with “essential equipment.”
The World Bank also disbursed $1.74 million for Armenian agriculture. Most of that will be used for partly compensating up to 10,000 farmers in the fruit-growing Ararat Valley who were hit particularly hard by a severe frost in December 2002. Some 1.4 million grapevine and fruit tree seedlings are expected to be purchased for rehabilitating 1,500 hectares of vineyards and orchards. The frost severely damaged vines and trees on about 23,000 hectares of land.
The latest installments have brought to almost $790 million the total amount of World Bank loans given to Armenia since independence. Robinson said the bank’s board will likely lend a further $30 million for the government’s ongoing reforms of the social security and healthcare sectors at a meeting next month.
The meeting is also expected to approve the bank’s new four-year “country assistance strategy” (CAS) for Armenia. The government hopes to secure $200 million in fresh loans under that program.
(Photolur photo: Roger Robinson.)